ACIT, New Delhi V. Sh. Arvind Khanna, New Delhi

ITA 1117/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0355 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-02-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 12-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS ANUSHA KHURANA
• Keywords: Unexplained investment; Gift; Retrospective amendment; Question of law; Fair market value; Valuation report; Onus to prove
• Section: 69B; 69; 148

Judgement Text

I.T.A. NO. 1117/DEL/2010 1/1 IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, NEW DELHI, BENCH A NEW DELHI, BENCH A NEW DELHI, BENCH A NEW DELHI, BENCH A BEFORE SHRI I. P. BANSAL, JUDICIAL MEMBER AND SHRI A K GARODIA, ACCOUTANT MEMBER ITA NO. 1117 /DEL/2010 (ASSESSMENT YEAR 2006-07) ACAIT, CC-5, VS. SHRI ARVIND KHANNA, NEW DELHI 2, SHANTI FARMS, VILLAGE SAHOORPUR, CHANDANHOLA, MEHRAULI, NEW DELHI. (APPELLANTS) (RESPONDENTS) PAN / GIR NO. AQIPK9007F APPELLANT BY: MRS. ANUSHA KHURANA, SR. DR RESPONDENT BY: SHRI SALIL AGARWAL, ADV. SHRI GAUTAM JAIN, CA OR OROR ORDER DER DER DER PER A. K. GARODIA, AM: PER A. K. GARODIA, AM: PER A. K. GARODIA, AM: PER A. K. GARODIA, AM: 1. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST T HE ORDER OF LD. CIT(A) I, NEW DELHI DATED 24.12.2009 FOR THE ASSESS MENT YEAR 2006- 07. THE GROUNDS OF APPEAL RAISED BY THE REVENUE AR E AS UNDER: 1) THE ORDER OF THE LD. CIT(A) IS NOT CORRECT IN L AW AND FACTS. 2) ON THE FACTS AND IN THE CIRCUMSTANCES, THE LD. C IT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELET ING THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT AMOUNTING TO ` 1,30,34,406/- ON THE BASIS OF DIFFER ENCE BETWEEN VALUE DECLARED AND VALUE ESTIMATED BY DVO. 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) BEING ERRONEOUS IN LAW AND ON FACTS BE VACAT ED AND THE OTHER OF THE A.O. BE RESTORED. 2. THE BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE A.O. IN THE ASSESSMENT ORDER THAT SHRI AMIT BURMAN & MRS. A SHA BURMAN HAVE ENTERED INTO AGREEMENT EXECUTED ON 30.10.2003 FOR SALE OF 83987 SHARES OF M/S. TROZEN DEVELOPERS PVT. LTD. (T DPL) TO THE I.T.A. NO. 1117/DEL/2010 2/2 ASSESSEE AND HIS WIFE SHAGUN KHANNA. OUT OF THESE TOTAL 83987 SHARES, 61999 SHARES WERE HELD BY M/S. SHYAM ENTERP RISES PVT. LTD., 15999 SHARES WERE HELD BY MS. ASHA BURMAN AND THE R EMAINING 5989 SHARES WERE HELD BY MR. AMIT BURMAN. IT WAS N OTED BY THE A.O. THAT AS PER THE AGREEMENT, MAJOR SHAREHOLDING OF THIS COMPANY WAS TRANSFERRED AND THE CLOSING DATE WAS FIXED ON O R BEFORE 31.3.2006. IT IS ALSO NOTED BY THE A.O. THAT AS PE R THE LETTER OF THE ASSESSEE FILED ON 15.12.2008, THE ASSESSEE HAS FILE D A DECLARATION THAT THE ENTIRE CONSIDERATION FOR PURCHASE OF 83987 EQUITY SHARES OF THE COMPANY TDPL WAS PROVIDED BY HIM AS GIFT TO HIS WIFE MS. SHYAM KHANNA. HE FURTHER FILED THE DETAILS OF PAYM ENTS MADE TO SHYAM ENTERPRISES PVT. LTD., MS. ASHA BURMAN AND MR . AMIT BURMAN AS SALE CONSIDERATION FOR PURCHASE OF SHARES OF TDP L. AS PER THE SAME, TOTAL PAYMENT OF ` 8,24,83,333/- WAS MADE TO ACQUIRE THESE SHARES. THEREAFTER, IT IS NOTED BY THE A.O. THAT T O DETERMINE THE CORRECT VALUE OF THE PROPERTY, WHICH WAS THE ONLY K NOWN ASSET OF THE COMPANY TDPL, REFERENCE WAS SENT TO THE VALUATIONS OFFICER U/S 55A OF THE ACT SUBSEQUENT TO ISSUE OF NOTICE U/S 148 ON 24.9.2007. IT IS NOTED BY THE A.O. THAT AS PER THE ORDER U/S 55A OF THE I. T. ACT, THE FAIR MARKET VALUE ON THE DATE OF TRANSFER OF IMPUGN ED ASSET WAS DETERMINED AT ` 987.08 LACS. ON THIS BASIS, THE A. O. WORKED OUT THAT THE AMOUNT SHOWN AS PAID BY THE ASSESSEE IS LESS BY AN AMOUNT OF `162.08 LACS AND THE A.O. HELD THAT THIS WAS ALSO P AID AS ON MONEY OVER AND ABOVE THE DECLARED VALUE OF THE SHARES. S INCE THE PAYMENTS WERE MADE IN THREE FINANCIAL YEARS I.E. FI NANCIAL YEAR 2003-04; `40 LACS, FINANCIAL YEAR 2004-05; ` 100 LA CS AND FINANCIAL YEAR 2005-06 `574.83 LACS, THE A.O. DISTRIBUTED THE PAYMENT OF ON MONEY ALSO IN THE SAME PROPORTION AND WORKED OUT TH E AMOUNT OF PAYMENT OF ON MONEY IN THE PRESENT YEAR AT ` 1,30,3 4,406/- OUT OF TOTAL ALLEGED PAYMENT OF ON MONEY OF ` 162.08 LACS. THE A.O. MADE ADDITION OF THIS AMOUNT IN THE PRESENT YEAR I.E. OF ` 1,30,34,406/-. I.T.A. NO. 1117/DEL/2010 3/3 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A) WHO HAS DELETED THE ENTIRE ADDITION ON T HIS BASIS THAT ONLYR VALUATION REPORT OF DVO CANNOT BE MADE THE BA SIS FOR MAKING ADDITION U/S 69 OF THE I. T. ACT. IT IS HELD BY HI M THAT IN THE ABSENCE OF ANY ACTUAL EVIDENCE ALLEGING AND ESTABLISHING TH AT AN EXTRA INVESTMENT WAS MADE BY THE ASSESSEE, ADDITION MADE IS WHOLLY UNSUSTAINABLE. NOW, THE REVENUE IS IN APPEAL BEFORE US. 3. LD. D.R. SUPPORTED THE ASSESSMENT ORDER. IT IS ALSO SUBMITTED BY HER THAT AS PER THE PROVISIONS OF SECTION 142A I NSERTED BY THE FINANCE NO.2 ACT 2004 WITH RETROSPECTIVE EFFECT FRO M 15.11.1972, THE A.O. CAN REFER THE MATTER FOR VALUATION FOR MAK ING ADDITION U/S 69, 69A AND 69B AND HENCE THE ACTION OF THE A.O. OF REFERRING THE MATTER TO THE DVO IS JUSTIFIED AND AS PER LAW. 4. AS AGAINST THIS, THE LD. A.R. SUPPORTED THE ORDE R OF LD. CIT(A). IT WAS ALSO SUBMITTED BY HIM THAT AS PER THE PROVIS IONS OF SECTION 69B, THIS IS THE FIRST REQUIREMENT THAT THE A.O. FI NDS THAT THE AMOUNT SPENT AND MAKING SUCH INVESTMENT EXCEED THE AMOUNT RECORDED IN THAT BEHALF IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. IT WAS HIS SUBMISSION THAT IF SOME MATERIAL IS AVAILAB LE WITH THE A.O. ON THE BASIS OF WHICH, IT IS FOUND BY HIM THAT THE ACTUAL PAYMENTS MADE BY THE ASSESSEE IS MORE THAN THE DECLARED VALU E, THEN ONLY AN ADDITION CAN BE MADE U/S 69B AND FOR THAT PURPOSE, THE MATTER MAY BE REFERRED TO THE DVO ALSO U/S 142A. BUT IN THE P RESENT CASE, THERE IS NO MATERIAL AVAILABLE WITH THE A.O. TO SHOW THAT THE ACTUAL VALUE OF THE SHARES PURCHASED BY THE ASSESSEE IS MORE THA N ITS DECLARED VALUE AND HENCE, NEITHER SECTION 69B NOR SECTION 14 2A IS ATTRACTED IN THE PRESENT CASE. I.T.A. NO. 1117/DEL/2010 4/4 5. RELIANCE WAS PLACED BY HIM ON THE TRIBUNAL DECIS ION RENDERED IN THE CASE OF DCIT VS SHRI VINOD SINGHAL IN I.T.A. NO. 3647 AND 3648/DEL/2008 DATED 08.05.2009. IT WAS SUBMITTED B Y HIM THAT THE COPY OF THIS TRIBUNAL ORDER IS AVAILABLE ON PAGES 1 24-127 OF THE PAPER BOOK. IT IS ALSO SUBMITTED THAT IN THE PRESE NT CASE ALSO, NO EVIDENCE/DOCUMENT HAS BEEN BROUGHT ON RECORD BY THE A.O. TO SUGGEST/ESTABLISH THAT THE ASSESSEE HAD MADE EXPEND ITURE MORE THAN WHAT WAS DECLARED OR DISCLOSED BY HIM AS A CON SIDERATION TO PURCHASE THE IMPUGNED SHARES. ITS IS ALSO SUBMITTE D THAT THE PURCHASE OF SHARES IN THE PRESENT CASE IS ALSO SUPP ORTED BY AN AGREEMENT COPY OF WHICH IS AVAILABLE ON PAGES 40-51 OF THE PAPER BOOK. IT IS SUBMITTED THAT THIS TRIBUNAL DECISION IS SQUARELY APPLICABLE IN THE PRESENT CASE. RELIANCE WAS ALSO PLACED ON TWO JUDGMENTS OF HON'BLE HIGH COURT OF DELHI RENDERED I N THE CASE OF CIT VS SHAKUNTALA DEVI AS REPORTED IN 316 ITR 46 AND IN THE CASE OF CIT VS SMT. SURAJ DEVI AS REPORTED IN 328 ITR 604. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD, HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND THE JUDGMENTS CITED BY LD. A.R. AFTER GO ING THROUGH THE ASSESSMENT ORDER, WE FIND THAT THIS IS NOT THE CASE OF THE A.O. THAT ANY DOCUMENT OR ADVERSE MATERIAL WAS FOUND BY HIM S UGGESTING ANY EXTRA PAYMENT BY THE ASSESSEE OVER AND ABOVE THE DE CLARED AMOUNT OF CONSIDERATION FOR PURCHASE OF SHARES IN Q UESTION. AS PER THE A.O., THE MATTER WAS REFERRED TO THE VALUATION OFFICER I.E. DVO TO DETERMINE THE CORRECT VALUE OF THE PROPERTY WHICH W AS THE ONLY KNOWN ASSET OF THE COMPANY TDPL. HENCE, IT IS APPA RENT THAT THERE WAS NO ADVERSE MATERIAL AVAILABLE ON RECORD TO ESTA BLISH/SUGGEST ANY EXTRA PAYMENT BY THE ASSESSEE TO ACQUIRE THESE SHARES. THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO THE FACT S IN THE CASE OF DCIT VS SHRI VINOD SINGHAL (SUPRA). IN THAT CASE A LSO, THE ASSESSEE I.T.A. NO. 1117/DEL/2010 5/5 PURCHASED A PROPERTY FOR CONSIDERATION OF ` 9.50 LA CS WHICH WAS VALUED BY THE A.O. AT ` 35.20 LACS ON THE BASIS OF VALUATION REPORT GIVEN BY THE DVO AND MADE ADDITION OF THIS DIFFEREN CE AMOUNT. SUCH ADDITION WAS NOT FOUND SUSTAINABLE BY THE TRIB UNAL IN THAT CASE BECAUSE THERE WAS NO ADVERSE MATERIAL AVAILABLE ON RECORD TO ESTABLISH/SUGGESTS THAT THE ASSESSEE HAD MADE EXPEN DITURE MORE THAN WHAT WAS DECLARED AND DISCLOSED BY HIM AS A CO NSIDERATION TO PURCHASE THE SAID ASSET. HENCE, BY RESPECTFULLY FO LLOWING THIS TRIBUNAL DECISION, WE DO NOT FIND ANY REASON TO INT ERFERE IN THE ORDER OF LD. CIT(A) IN THE PRESENT CASE. 7. REGARDING THE JUDGMENT OF HON'BLE HIGH COURT OF DELHI RENDERED IN THE CASE OF CIT VS SHAKUNTALA DEVI (SUP RA), WE FIND THAT THIS JUDGMENT OF HON'BLE HIGH COURT OF DELHI IS NOT APPLICABLE IN THE PRESENT CASE BECAUSE THAT IS THE CASE OF A SELLER O F THE PROPERTY WHEREAS, THE PRESENT CASE IS IN CONNECTION WITH PUR CHASE OF SHARES BY THE ASSESSEE. 8. THE SECOND JUDGMENT CITED BY THE LD. A.R. IS THE JUDGMENT OF HON'BLE HIGH COURT OF DELHI RENDERED IN THE CASE OF CIT VS SURAJ DEVI (SUPRA). IN THAT CASE, THE ASSESSEE HAD MADE INVES TMENT IN PROPERTY AND SUCH INVESTMENT WAS DULY DECLARED IN T HE REGULAR RETURN OF INCOME FILED BY THE ASSESSEE. THE ADDITI ON WAS MADE BY THE A.O. ON THE BASIS OF REPORT OF DVO BUT THE ADDI TION WAS DELETED BY THE TRIBUNAL. ONE VERY VITAL FACT OF THAT CASE IS THAT THE PROPERTY IN QUESTION WAS IN POSSESSION OF A TENANT AND THIS VITAL ASPECT HAD NOT BEEN CONSIDERED BY THE DVO AND THE A.O. BUT IR RESPECTIVE OF THIS ASPECT, IT WAS HELD BY THE HON'BLE HIGH COURT OF DELHI IN THAT CASE THAT IT IS SETTLED LAW THAT THE PRIMARY BURDEN OF PROOF TO PROVE UNDERSTATEMENT OR CONCEALMENT OF INCOME IS ON THE R EVENUE AND IT IS ONLY WHEN SUCH BURDEN IS DISCHARGED THAT IT WOUL D BE PERMISSIBLE I.T.A. NO. 1117/DEL/2010 6/6 TO RELY UPON THE VALUATION GIVEN BY THE DVO. IT IS ALSO HELD BY THE HON'BLE HIGH COURT OF DELHI THAT THE OPINION OF THE DVO PER SE, IS NOT AN INFORMATION AND CANNOT BE RELIED UPON WITHOUT TH E BOOKS OF ACCOUNTS BEING REJECTED WHICH HAS NOT BEEN DONE IN THAT CASE. IT WAS HELD BY THE HON'BLE HIGH COURT OF DELHI IN THAT CASE THAT NO SUBSTANTIAL QUESTION OF LAW ARISES IN THAT CASE. I N VIEW OF THE DIFFERENCE IN FACTS AS DISCUSSED ABOVE, THIS JUDGME NT OF HON'BLE HIGH COURT OF DELHI IS NOT DIRECTLY APPLICABLE IN T HE PRESENT CASE BUT STILL IT SUPPORTS THE VIEW TAKEN BY THE TRIBUNAL I N THE CASE OF DCIT VS VINOD SINGHAL (SUPRA) THAT THE BURDEN IS ON THE REVENUE TO BRING THE MATERIAL ON RECORD TO SUGGEST/ESTABLISH THAT AS SESSEE HAS MADE EXPENDITURE MORE THAN WHAT WAS DECLARED OR DISCLOSE D BY THE ASSESSEE AS CONSIDERATION TO PURCHASE THE PROPERTY. 9. IN VIEW OF THE ABOVE DISCUSSION, WE DECLINE TO I NTERFERE IN THE ORDER OF LD .CIT(A) BY RESPECTFULLY FOLLOWING THE T RIBUNAL DECISION RENDERED IN THE CASE OF DCIT VS VINOD SINGHAL (SUPR A) AND ALSO HON'BLE HIGH COURT OF DELHI JUDGMENT RENDERED IN TH E CASE OF SHAKUNTALA DEVI (SUPRA). 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. 11. PRONOUNCED IN THE OPEN COURT ON 11 TH FEB., 2011. SD./- SD./- ( I. P. BANSAL) (A K GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:11 TH FEB., 2011 SP. COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI